New health care law 'very complicated'

April 11, 2013

WEIRTON - David Fields, president and chief executive officer of Coventry Health Care Inc., began Wednesday's seminar on the new health care law by telling dozens of employers and human resources executives it's "very complicated and very counter-intuitive," and then spent the next 60-plus minutes explaining why.

Fields led the discussion at the second of three seminars designed to help members of the Weirton Area Chamber of Commerce digest the new law and what it will mean for their business and their work force. The chamber is hosting the seminars, with assistance from Assure America, WesBanco Insurance Services and Wells Fargo Insurance Services, at the Serbian- American Cultural Center. More than 50 local professionals took part in Wednesday's installment of the health care education program.

"I've read it four, five and six times, just to understand what the intent is because it's so very different from the free market and the way it's been done (historically)," Fields said. "When you see what all this is going to cost, I think that's the most frightening aspect of this."

Article Photos

WORRIED ABOUT IMPACT — Coventry Health Care Inc. President and CEO David Fields tells Weirton area employers why he’s worried about the impact the new health care law will have on consumers, employers and the industry at a seminar Wednesday at the Serbian-American Cultural Center in Weirton. The Weirton Area Chamber of Commerce together with Assure America, WesBanco Insurance Services and Wells Fargo Insurance Services sponsored the seminar, the second of three informational meetings they have planned. -- Linda Harris

He said the new health care program "is drowning in regulations, and a lot of it is counter-intuitive."

While some components are still evolving, the new health care law - also known as "Obamacare" or, more formally, the Patient Protection and Affordable Care Act - requires every American to have health insurance by Jan. 1, and every employer with 50 or more employees on the books to offer them health coverage. It's called pay-or-play. Companies with 50-plus workers that don't offer health coverage will be fined and the money used to help finance subsidies for those who don't have access to an affordable plan.

Come Jan. 1, Americans will have to prove to the Internal Revenue Service that they have insurance. If you have the resources but no coverage, you'll be fined - $95 in 2014, but after that it will increase and by 2016 will be hefty.

Coverage will be subsidized for people who don't have access to a qualified health plan, but how much each pays will be based on how much they make. And while the current proposal would require companies with 50-plus workers to offer coverage to employees and dependants, it excludes spouses from that category - problematic since he said the same proposed standard qualifies a non-working spouse for subsidies based on household income, not his or her own.

And given coverage costs, he said there's "not much incentive for people to opt in, it's cheaper to just opt-out."

"A single 23-year-old is going to look at the cost of being covered versus paying the $95 opt-out fee, and they're probably going to say they can't afford it and opt out," he said, adding that could expose a critical flaw in the program.

"The system is predicated on young, healthy people" joining, Fields said. "If they don't come into the pool, that's probably the single most terrifying thing to insurance executives" because the rates they offer will factor in risk. Make a mistake in quantifying that risk "and (insurers) can easily lose billions of dollars," he said. "And that's no exaggeration."

"Insurance executives like steady and predictable," he added. "It's the antithesis of that."

Fields said employers with fewer than 50 workers won't face penalties if they don't offer coverage, or even if they scuttle an existing plan. "By law they're absolved from responsibility for coverage," he said, suggesting a small employer who spends, say, $400,000 a year for health coverage for his or her workers may decide to opt out and instead pocket some - or all - of that money, or perhaps sweeten the wages for workers in lieu of company paid health care.

"One of the biggest challenges is that when the Congressional Budget Office marked up the cost of the bill, they assumed 2 million to 3 million people would opt into coverage," he said. "If you look at care today it's possible 20 million to 30 million will enter the exchanges. Think of the financial consequences if we have to provide subsidies (for all of them)."

The final installment in the three-seminar series will be May 1 and will feature Highmark West Virginia CEO Fred Early. His topic will be "Understanding the Individual Mandate."